Morning Futures Roundup

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Mass Confusion for Oil Traders Leads to Consolidation


  Fundamentals

Crude Oil futures have pulled back a bit this morning, after Chinese manufacturing data showed a contraction in activity. The Oil market has been a bit tough for many traders to read lately, as investors have seen softer economic data trickling in from various parts of the world. At the same time, inventory levels continue to drop in the US, falling for the seventh consecutive week. The decline in US inventories has kept the price of Crude in the high 90's, but EU debt concerns, soft economic data in the US, and a mix of opinion on the Chinese economic outlook all have had traders on edge and have kept prices from crossing the century mark. The choppiness of the currency markets, which is often a deciding factor when data is mixed, has done little to offer clarity. Given the tight inventory levels, some traders may want to keep a close eye on upcoming US economic numbers, as even a modest uptick in data could result in a breakout back above the $100 a barrel mark. Further weakening in US economic data, especially employment numbers, coupled with an inventory build, could take prices into the low 90's.



  Technical Notes

Turning to the chart, we see the September Crude Oil chart trapped in a sideways range between 95.00 and 100.00 for the entire month of July. Breakouts out of an extended consolidation period like this tend to be on the explosive side, but direction is difficult to predict. That being said, the Crude Oil chart shows quite a bit of congestion immediately outside of this range. On the downside, additional support comes in at 92.00 and 90.00, while resistance comes in at 102.70 and 105.00 on the upside. The 20 and 50-day moving averages have lost their significance because of the choppy sideways trading, but the 100-day average still has relevance near the 102.00 level. The oscillators remain neutral, giving no hint of an imminent breakout.


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